On July 30, 2002, President Bush signed the Sarbanes-Oxley Act of 2002, H.R. 3763, well-publicized in the press as a legislative response to the perceived excesses of corporate America: Enron; WorldCom; Tyco; Global Crossing, etc.
The Sarbanes-Oxley Act of 2002 contains an array of provisions affecting lawyers as professionals serving businesses and contains one provision that will clearly impact corporate counsel in the ethical discharge of their duties. Section 307 of the Act and the recently released Proposed Roles of the Securities Exchange Commission regarding lawyer duties and implementation of Section 307 require counsel to go "up the ladder," to the board of directors, if necessary, with information about serious wrongdoing. To a degree, this presumably preemptive federal law is in tension with the ABA Rules of Professional Conduct and the Nevada Supreme Court Rules of Professional Conduct, both of which provide for a discretionary rather than mandatory in-house "whistle blowing."
An earlier draft of the SEC Rule implementing Section 307 would have required attorneys to engage in the essential equivalent of external whistle blowing if the Board did not take "appropriate action" when faced with evidence of corporate wrongdoing. The SEC, responding to substantial criticism from the organized bar (and to some degree the bench), backed away from this "noisy withdrawal" trial balloon. This article briefly sketches the new law and its provisions regulating lawyer professional conduct.
Nev. Lawyer, April 2003.
Stempel, Jeffrey W., "An Overview of the Sarbanes-Oxley Act and Its Implications for Attorneys" (2003). Scholarly Works. 177.